Morrisons has moved to calm supplier fears they could be squeezed out of its £180m seafood category following its move into fish processing.

On Monday, Morrisons announced it had bought a factory on the Europarc business park in Grimsby to start its first in-house fish processing business.

The retailer intends to have the site fully operational in a year, after which it plans to process 72% of the £180m of fish that it sells each year. Initially, most of that will consist of core species being packed at the site.

In a second phase, production would be expanded, possibly into more complex processing and value-added formats, said group manufacturing director Martyn Fletcher. The factory had come with a “substantial piece of land to the side” earmarked for expansion, he added.

However, he denied the acquisition of the site would ultimately result in Morrisons taking all fish processing in-house. “This is not about us being all things to all men,” he said.

Instead, it would continue to work with co-packers and use third parties for exotic and specialist lines, he insisted. Morrisons would continue to work closely with suppliers and deal direct with fishermen wherever possible, he added.

“When you get into a vertically integrated model, you’ve got to engage fully with the supply sources,” he said. In meat, Morrisons had strong relationships with farmers and would emulate this in fish, he added.

One industry source suggested Morrisons’ move would have been “gutting” for Young’s, which stands to acquire contracts to supply fish to Morrisons once its parent company’s acquisition of Cumbrian Seafoods is cleared by the OFT.

Neither Young’s nor Morrisons would comment, but Morrisons stressed it intended to “maintain relationships” with its supply base.